Stocks Hit Records on Fed Cut Hopes as Traders Brace for Key Inflation Data – US Market Wrap

Stocks hit all-time highs on hopes that the Federal Reserve will lower interest rates to combat a jobless recovery, with traders also bracing for inflation data that will test the market’s faith.

While most S&P 500 shares fell, the index rose on gains in all major technology companies except Apple, which fell 1.5% after introducing its iPhone 17, which included an already expected slimmer model. Bond prices fell after a four-day rally, raising two-year yields from their lowest level since 2022. Oil prices soared after an Israeli attack in Qatar sparked fears of a Middle East conflict escalation.

Following additional data indicating labor-market cooling, investors braced for key inflation figures due in the coming days. The reports will help set the tone for next week’s Fed meeting, as well as the extent of easing until the end of 2025. And that will undoubtedly determine whether Wall Street can sustain this month’s gains.

With money markets almost unanimously forecasting three Fed rate cuts this year, the bar for both the producer and consumer price indexes is high. A higher-than-expected inflation increase would complicate policy decisions at a time when there is growing pressure to provide economic relief through lower interest rates.

In the run-up to the inflation reports, government data revealed that US job growth was far less robust in the year ending March than previously reported. According to the preliminary benchmark revision released Tuesday, the number of employees on payrolls will likely be reduced by a record 911,000, or 0.6%. The final numbers are due early next year.